Will the Doha Round get the needed impulse before the June-30 deadline?

23/07/2012

The moment is crucial, as the dream of reaching a conclusion for the Doha Round has a few more days of subsistence: either the negotiations are defined by June 30 – before the US TPA ends – or they will be postponed for an undetermined term.

“The breakthrough has to come in the first part of the year,” WTO Director-General Lamy says. “The distance between a breakthrough and a final conclusion, I would say, (is) roughly… eight months.” Without fast-track authority, the Bush administration would face trouble concluding multilateral trade deals, as it would allow Congress to amend the contents of the existing agreements, prolonging the process and threatening the chances of consensus. Since 2006, talks have been hindered over a deadlock between the members of the “G-4”, as developed countries led by the European Union and the United States demanded for important tariff cuts for industrial goods and services’ liberalization, while, on the other side, the “G-20” – developing countries represented by Brazil and India – insist on market access and reductions of trade distorting subsidy schemes, mainly for agricultural goods. Farm financial supports and tariffs have definitely been a central issue for both sides from the time when the Doha Development Round was launched in 2001.

After the unsuccessful meeting in New Delhi on mid-April and in Paris on May 17-18, 2007, the four key players’ negotiators will make new attempts of agreements in London, on June 10, and on a yet unscheduled meeting in mid-June. All of the efforts are aiming at the generation of a momentum that will eventually enable the conclusion of the Doha Round, in an ultimate struggle as they seem to be closer than ever to a final pact on agriculture.

The 19 members of the Cairns Group affirm they are committed to cut tariffs, open sensitive markets and phase out export subsidies to fasten a trade deal. Also, Ambassador Crawford Falconer (New Zealand), Chairman for Agriculture Negotiations, recently released a report in which he points out the need for the US and the EU to concede in matters relating to subsidies and customs duties on farm commodities, if they expect any success for the discussions. Without an agreement on agriculture, NAMA talks are also in great danger, though not paralyzed.

US and Europe seem to have their undertakings interconnected, as one can only compromise if the other also concedes, and no one wants to be the first to make a move, while Japan seems to have taken a free ride off the stagnation. Meanwhile, developing countries like Brazil and India are reluctant to open their markets without the guarantee of substantial changes on farm tariffs and subsidies, and keep rejecting the proposals presented so far. In the eyes of the developed countries, however, this position in negotiations is said to be highly defensive, if not outright protectionist. The hostility to the conclusion of the Doha Round, however, is also not negligible outside the main circles of leading countries. Opponents affirm that, aside developed countries, only large developing countries, such as China, Brazil and India, would benefit from the Round.

According to their manifests, while subsistence farmers supposedly perceive net losses or, in the best case scenario, insignificant advantages, gains are concentrated in those countries’ powerful agribusinesses and industries. The question is: What happens to all the improvements achieved so far if Doha fails? Such collapse is expected to prompt innumerous bilateral trade agreements, which many specialists comment as an undesired phenomenon for its unbalance and lack of transparency.

Preferential trade agreements would weaken the existing multilateral trading system and, by becoming more entrenched over time, reforming the system would be even harder in the future. The WTO is considered by many an icon of huge success among the international organizations, a symbol of trade evolution, and the fairest and most-balanced multilateral forum for both developed and developing countries. Former WTO Director-General Moore stated that the WTO system had not only been a driver for international stability and peace, but had helped lift about 600 million people out of extreme poverty, increased global life expectancy by 20 years, and cut infant mortality by two-thirds.

Some specialists contest the pursuit of the original Doha agenda, as countries wait as long as it would take to get the job done; settling for a more modest outcome, sooner rather than later, would probably be best for the multilateral trading system. For them, the opportunity to reform the system has already been missed, and the goal to preserve it should become the priority at this point.

Despite the resistance, in case Doha is successful and promises are kept, along with the required adjustments, the rich would benefit from the reallocation of their generous subventions in more effective sectors of their economies, at the same time as the developing countries would experience a substantial growth by retrieving barred markets for their commodities, while becoming stronger by learning to compete with “grown-ups” in industrialized products and services. And, with a bit of luck, future negotiations can be devoted to debating other imperative matters, such as environment protection and labor standards, in the path of evolution expected for the multilateral trade, in an actual Development Round.